The Jt.CIT.(OSD)Circle-1, Bhavnagar V. Shri Mohmedhussien H.Farista, Bhavnagar

ITA 244/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63001 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R POPAT
• Assessee Lawyers: D K SINGH
• Section: 143(3); 133(6); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI G.C. GUPTA, VP AND SHRI ANIL CHATURVED I, AM) ITA NO.3213/AHD/2011 AND 244/AHD/2012 A. Y.: 2008-09 MOHMEDHUSSAIN H. FARASTA, PROP. G. M. ENTERPRISE, MATCH FACTORY COMPOUND, KUMBHARWADA, MOTI TALAV ROAD, BHAVNAGAR 364 001 P. A. NO. AEHPM 4750 N THE J. C. I. T. (OSD), CIRCLE-1, JASHONATH CHOWK, BHAVNAGAR 364 001 VS THE D. C. I. T., CIRCLE-1, AAYAKAR BHAVAN, NAKUBAUG, BHAVNAGAR MOHMEDHUSSAIN H. FARASTA, PROP. G. M. ENTERPRISE, MATCH FACTORY COMPOUND, KUMBHARWADA, MOTI TALAV ROAD, BHAVNAGAR 364 001 P. A. NO. AEHPM 4750 N (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI B. R. POPAT, AR RESPONDENT BY SHRI D. K. SINGH, SR. DR DATE OF HEARING: 20-09-2012 DATE OF PRONOUNCEMENT: 12-10-2012 O R D E R PER ANIL CHATURVEDI: THESE TWO CROSS APPEALS ARE FILED BY THE ASSESSEE AND BY THE REVENUE AGGRIEVED BY THE COMMON ORDER OF THE LEARNED CIT-(A)-XX, AHMEDABAD BOTH DATED 30- 11-2011 ITA NO.3213/AHD/2 011 & 244/AHD/2012 (AY: 2008-09) MOHMEDHUSSAIN FARISHTA 2 PASSED U/S 250 READ WITH SECTION 143(3) OF THE IT A CT IN APPEAL NO. CIT (A) /XX/478/10-11 FOR THE ASSESSMENT YEAR 2008- 09. SINCE THE ISSUE INVOLVED IN BOTH THE APPEALS IS CONNECTED, TH E SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE AS UNDER: ITA NO.3213/AHD/2011 (ASSESSEES APPEAL FOR AY 2008-09) 2. THE ASSESSEE HAS RAISED TWO GROUNDS IN HIS APPEA L WHEREIN GROUNDS NO.1 HAS NOT BEEN PRESSED, HENCE DOES NOT S URVIVE FOR ADJUDICATION AND THE SAME IS DISMISSED AS SUCH. THE LONE SURVIVING GROUND NO.2 OF THE APPEAL IS REPRODUCED HEREIN BELO W: 2. THE LEARNED CIT(A)-XX, AHMEDABAD, HAS ERRED IN PARTLY CONFIRMING THE ADDITION BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT, TO THE EXTENT OF RS.15,46 ,847/-, IN RESPECT OF OLD AND BROUGHT FORWARD OUTSTANDING LIAB ILITIES TOWARDS FOUR SPECIFIED PARTIES. ITA NO.244/AHD/2012 (REVENUES APPEAL FOR AY 2008-09) 3. THE REVENUES EFFECTIVE GROUND NO.1 RAISED IN IT S APPEAL READS AS UNDER: 1. THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AN D ON FACTS IN DELETING THE ADDITION OF RS.40,11,315/- U/ S 41(1) OF THE I T ACT. 4. THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETOR OF G. M. ENTERPRISE AND IS ENGAGED IN THE BUSINESS OF TRADIN G OF OLD AND USED ITA NO.3213/AHD/2 011 & 244/AHD/2012 (AY: 2008-09) MOHMEDHUSSAIN FARISHTA 3 SHIP NAVIGATION PARTS. THE ASSESSEE FILED ITS RETUR N OF INCOME ON 30- 09-2008 FOR AY 2008-09 DECLARING TOTAL INCOME OF RS .9,93,510/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSES SMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 29-12 -2010 AND THE INCOME WAS DETERMINED AT RS.68,75,793/- AFTER MAKIN G CERTAIN ADDITIONS. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A). THE LEARNED CIT(A) VIDE ORDER DATED 30-11-2011 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LEARNED CI T(A), BOTH THE ASSESSEE AND THE REVENUE ARE NOW IN APPEAL BEFORE U S. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ON PERUSING THE BALANCE SHEET NOTICED THAT THE ASSESSEE HAD SHOWN RS.1,29,17,045/- AS SUNDRY CREDITORS FOR GOOD S. THE ASSESSEE WAS ASKED TO FILE THE COMPLETE LIST ALONG WITH THE NAMES AND ADDRESSES OF THE CREDITORS. THE ASSESSING OFFICER I SSUED NOTICE U/S 133(6) OF THE ACT TO ALL THE PARTIES AND CALLED FOR INFORMATION WITH RESPECT TO THEIR TRANSACTIONS WITH THE ASSESSEE. TH E ASSESSING OFFICER RECEIVED CONFIRMATION FROM SOME OF THE PARTIES. FRO M THE OTHER PARTIES LISTED VIDE PARA 6 OF THE ASSESSMENT ORDER, UNFAVOURBLE / NO REPLIES WERE RECEIVED. THE ASSESSING OFFICER ALSO D EPUTED THE INSPECTOR TO MAKE INQUIRIES. BASED ON THE REPORT OF THE INSPECTOR AND REPLY OF THE ASSESSEE, THE ASSESSING OFFICER CONCLU DED THAT THE ASSESSEE HAD SHOWN SUM PAYABLE TO NUMBER OF SUNDRY CREDITORS THOUGH IN MANY CASES THE PARTIES DID NOT EXIST AT T HE ADDRESSES AND SOME OF THE CREDITORS HAD DENIED HAVING CARRIED OUT ANY BUSINESS TRANSACTION WITH THE ASSESSEE. HE, THEREFORE, CONCL UDED THAT THE ITA NO.3213/AHD/2 011 & 244/AHD/2012 (AY: 2008-09) MOHMEDHUSSAIN FARISHTA 4 LIABILITY SHOWN BY THE ASSESSEE WERE NOT PAYABLE AN D ACCORDINGLY ADDED BACK RS.58,82,283/- U/S 41(1) OF THE ACT. 6. AGGRIEVED BY THE ACTION OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A). BEFOR E THE LEARNED CIT(A), THE ASSESSEE INTER ALIA SUBMITTED THAT OUT OF ADDITION MADE IN RESPECT OF 14 CREDITORS, BALANCE IN RESPECT OF 12 C REDITORS ARE OLD AND ARE BROUGHT FORWARD FROM EARLIER YEARS. THERE IS NO THING ON RECORD TO PROVE THAT THERE IS REMISSION OF LIABILITY AND THER EFORE PROVISIONS OF SECTION 41 (1) OF THE ACT ARE NOT ATTRACTED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LEARNED CIT(A) DEL ETED THE ADDITION IN RESPECT OF THE CREDITORS WHERE THE BALANCES WERE BROUGHT FORWARD FROM EARLIER YEARS FOR THE REASONS THAT NO EVENT TO OK PLACE IN THE YEAR TO INVOKE THE PROVISIONS OF SECTION 41 (1) OF THE A CT. HE ACCORDINGLY DELETED THE ADDITION OF RS.40,11,315/-. HE, HOWEVER , CONFIRMED THE ADDITION IN RESPECT OF 2 PARTIES HAVING AGGREGATE O UTSTANDING OF RS.3,24,211/- FOR THE REASON THAT THE CREDITS IN TH EIR ACCOUNTS AROSE DURING THE YEAR AND THE ASSESSEE FAILED TO ESTABLIS H THEIR IDENTITIES. HE ALSO CONFIRMED THE ADDITION IN RESPECT OF 4 PART IES WHERE THE AGGREGATE CREDIT BALANCE OUTSTANDING WAS OF RS.15,4 6,847/- FOR THE REASON THAT THE PARTIES HAD DENIED HAVING ANY TRANS ACTION WITH THE ASSESSEE AND THEY HAD STATED THAT THERE WAS NO BALA NCE TO BE RECEIVABLE FROM THE ASSESSEE. 7. AGGRIEVED BY THE ACTION OF THE LEARNED CIT(A) OF CONFIRMING THE ADDITION OF RS.18,70,968/-, THE ASSESSEE IS NOW APP EAL BEFORE US AND ITA NO.3213/AHD/2 011 & 244/AHD/2012 (AY: 2008-09) MOHMEDHUSSAIN FARISHTA 5 THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEA RNED CIT(A) IN DELETING ADDITION OF RS.40,11,315/-. 8. BEFORE US, THE LEARNED AR SUBMITTED THAT THE CRE DITORS APPEARING IN THE BALANCE SHEET REPRESENT CREDITORS FOR GOODS AND THE ASSESSEE ACKNOWLEDGES ITS LIABILITY TO PAY AND THE ASSESSEE HAS NOT WRITTEN BACK THE AMOUNT IN THE PROFIT AND LOSS ACCO UNT. HE PLACED ON RECORD THE COPIES OF CONFIRMATION AND BILLS AT PAGE 9 TO 68 OF THE PAPER BOOK TO SUPPORT HIS CONTENTION. HE ALSO PLACE D RELIANCE ON THE DECISIONS OF AHMEDABAD BENCHES OF THE TRIBUNAL IN T HE CASE OF RAMESHBHAI AGARWAL (ITA NO.4064/AHD/2008) AND IN TH E CASE OF SANTRAM SPINNERS LTD. (ITA NO.54/AHD/2012). IN VIEW OF THESE FACTS HE URGED THAT THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER AND CONFIRMED BY THE LEARNED CIT(A) BE DELETED. 9. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE ASSESSING OFFICER HAD SENT LETTERS U/S 133(6) OF TH E ACT WHICH WERE RETURNED UNDELIVERED. THE ASSESSING OFFICER HAD ALS O DEPUTED INSPECTOR TO MAKE NECESSARY INQUIRIES. HE FURTHER S UBMITTED THAT SOME OF THE CREDITORS HAVE DENIED HAVING ANY TRANSA CTION WITH THE ASSESSEE AND HAVE CONFIRMED THAT NO AMOUNT IS RECEI VABLE FROM THE ASSESSEE. HE FURTHER URGED THAT THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . IN VIEW OF THESE FACTS THE ASSESSING OFFICER WAS RIGHT IN MAKING ADD ITION U/S 41 (1) OF THE ACT AND HE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ITA NO.3213/AHD/2 011 & 244/AHD/2012 (AY: 2008-09) MOHMEDHUSSAIN FARISHTA 6 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT T HE ASSESSEE HAD SHOWN IN ITS BALANCE SHEET THE AMOUNT PAYABLE TO IT S CREDITORS. THE ASSESSING OFFICER HAD ISSUED LETTERS U/S 133(6) OF THE ACT TO ALL THE CREDITORS. SOME OF THE CREDITORS HAVE DENIED HAVING ANY TRANSACTIONS WITH THE ASSESSEE. IN THOSE CASES THE LEARNED CIT(A ) HAS CONFIRMED THE ADDITION FOR THE REASON THAT THE ASSESSEE COULD NOT PROVE THEIR GENUINENESS. IN THE PAPER BOOK PLACED BY THE ASSESS EE WHICH HAS BEEN PLACED ON RECORD, THE ASSESSEE HAS PLACED COPI ES OF CONFIRMATION BUT THE CONFIRMATIONS ARE NOT SIGNED B Y THE COUNTER PARTIES NOR DOES IT HAVE THEIR PERMANENT ACCOUNT NU MBERS. THE DECISIONS RELIED UPON BY THE LEARNED AR ARE DISTING UISHABLE ON FACTS. THUS, IN VIEW OF THE TOTALITY OF FACTS, WE ARE OF T HE VIEW THAT THE LEARNED CIT(A) HAS RIGHTLY CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. 11. WITH RESPECT TO THE BALANCES BEING BROUGHT FORW ARD FROM EARLIER YEARS, THE LEARNED CIT(A) HAS GIVEN A FINDING THAT THERE IS NOTHING ON RECORD TO PROVE THAT THERE WAS REMISSION OF LIABILI TIES NOR HAS THE ASSESSEE WRITTEN BACK THE AMOUNT. THE LEARNED DR CO ULD NOT CONTROVERT THE FINDINGS OF THE LEARNED CIT(A) BY BR INGING ANY CONTRARY MATERIAL ON RECORD. THUS, IN VIEW OF THE TOTALITY O F THE FACTS, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) HAS RIGHTLY DELETE D THE ADDITION WITH RESPECT TO OLD OUTSTANDING CREDITORS BROUGHT FORWAR D FROM EARLIER YEARS. THUS, NO INTERFERENCE IS CALLED TO THE ORDER OF THE LEARNED CIT(A) ON THIS COUNT ALSO. ITA NO.3213/AHD/2 011 & 244/AHD/2012 (AY: 2008-09) MOHMEDHUSSAIN FARISHTA 7 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE AND THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12-10-2012 SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (ANIL CHATURVEDI) ACCOUNTANT MEMBER LAKSHMIKANT LAKSHMIKANT LAKSHMIKANT LAKSHMIKANTA AA A DEKA/ DEKA/ DEKA/ DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER AS SISTANT REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 09-10-2012 DIRECT TYPING 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 09-10-12 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: